**UNITED STATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

**FORM 10-Q**

 

 

** (Mark one)**

 

                    ý**   Quarterly report pursuant toSection 13 or 15(d) of the Securities Exchange Act of 1934**

 

**Forthe quarterly period ended September 30, 2001**

 

**OR**

 

                    o**   Transition report pursuant toSection 13 or 15(d) of the Securities Exchange Act of 1934**

 

**Commission File Number:  0-31151**

 

 

 

**RADVIEWSOFTWARE LTD.**

(Exact name of registrantas specified in its charter)

 

| **Israel**                       |   | **Not applicable**  |
|----------------------------------|--------|---------------------|
| (State or other  jurisdiction of |   | (I.R.S. Employer    |
| incorporation or  organization)  |   | Identification No.) |

 

**7 New England Executive Park**

**Burlington, MA 01803**

(Address of principalexecutive offices)

 

##### **Telephone Number (781)238-1111**

(Registrant’s telephonenumber, including area code)

 

**None**

(Former name, formeraddress and former fiscal year, if changed since last report)

 

 

 

 

                Indicate by checkmark whether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports) Yes  ý   No  o,and (2) has been subject to such filing requirements for the past 90 days:  Yes  ý   No  o.

 

                As of October 31,2001, there were 16,232,572 shares of the Registrant’s Ordinary Sharesoutstanding.

 

 

 

**RADVIEW SOFTWARE LTD. AND SUBSIDIARIES**

# **Form10-Q INDEX**

** **
|     | **PART I. FINANCIAL  INFORMATION**                                                                                 |   |
|----------|--------------------------------------------------------------------------------------------------------------------|--------|
|     |                                                                                                               |   |
| Item 1.  | Condensed Consolidated  Financial Statements:                                                                      |   |
|     |                                                                                                               |   |
|     | Condensed  Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000                              |   |
|     |                                                                                                               |   |
|     | Condensed  Consolidated Statements of Operations for the three and nine months ended   September 30, 2001 and 2000 |   |
|     |                                                                                                               |   |
|     | Condensed  Consolidated Statements of Cash Flows for the nine months ended   September 30, 2001 and 2000           |   |
|     |                                                                                                               |   |
|     | Notes  to Condensed Consolidated Financial Statements                                                              |   |
|     |                                                                                                               |   |
| Item  2. | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                        |   |
|     |                                                                                                               |   |
| Item  3. | Quantitative  and Qualitative Disclosures About Market Risk                                                        |   |
|     |                                                                                                               |   |
|     |                                                                                                               |   |
|     |                                                                                                               |   |
|     | **PART II. OTHER INFORMATION**                                                                                     |   |
|     |                                                                                                               |   |
| Item 2.  | Changes in Securities  and Use of Proceeds                                                                         |   |
|     |                                                                                                               |   |
| Item 5.  | Other Information                                                                                                  |   |
|     |                                                                                                               |   |
|     | Signatures                                                                                                         |   |
|     |                                                                                                               |   |

 

# **PARTI - FINANCIAL INFORMATION**

 

**RADVIEW SOFTWARE LTD. AND SUBSIDIARIES**

## **CONDENSED CONSOLIDATED BALANCE SHEETS**

**(In thousands, except share data)**

**(Unaudited)**

 
|                                                                                                                                                                                 |   | **September 30,** |   | **December 31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|------------------|--------|
| **2001**                                                                                                                                                                             |   | **2000**          |
| **ASSETS**                                                                                                                                                                           |   |              |   |             |   |
| Current Assets:                                                                                                                                                                      |   |              |   |             |   |
| Cash and cash equivalents                                                                                                                                                            |   | $                 | 15,745 |             | $      | 33,469 |   |
| Accounts receivable, net                                                                                                                                                             |   | 1,348             |   | 2,473            |   |
| Prepaid and other current assets                                                                                                                                                     |   | 470               |   | 728              |   |
| Total Current Assets                                                                                                                                                                 |   | 17,563            |   | 36,670           |   |
|                                                                                                                                                                                 |   |              |   |             |   |
| Property and Equipment, net                                                                                                                                                          |   | 2,032             |   | 2,503            |   |
| Other Assets                                                                                                                                                                         |   | 669               |   | 540              |   |
|                                                                                                                                                                                 |   |              |   |             |   |
| Total Assets                                                                                                                                                                         |   | $                 | 20,264 |             | $      | 39,713 |   |
|                                                                                                                                                                                 |   |              |   |             |   |
|                                                                                                                                                                                 |   |              |   |             |   |
| **LIABILITIES  AND SHAREHOLDERS’ EQUITY**                                                                                                                                       |   |              |   |             |   |
| Current Liabilities:                                                                                                                                                                 |   |              |   |             |   |
| Current maturities of long-term loans                                                                                                                                                |   | $                 | -      |             | $      | 3,814 |   |
| Accounts payable                                                                                                                                                                     |   | 619               |   | 2,004            |   |
| Accrued expenses                                                                                                                                                                     |   | 3,299             |   | 2,802            |   |
| Accrued restructuring charge, current  portion                                                                                                                                       |   | 164               |   | -                |   |
| Deferred revenue                                                                                                                                                                     |   | 1,468             |   | 1,459            |   |
| Total Current Liabilities                                                                                                                                                            |   | 5,550             |   | 10,079           |   |
|                                                                                                                                                                                 |   |              |   |             |   |
| Long-term Liabilities:                                                                                                                                                               |   |              |   |             |   |
| Accrued restructuring charge, less current  portion                                                                                                                                  |   | 223               |   | -                |   |
| Accrued severance                                                                                                                                                                    |   | 739               |   | 630              |   |
| Total Long-Term Liabilities                                                                                                                                                          |   | 962               |   | 630              |   |
|                                                                                                                                                                                 |   |              |   |             |   |
| Total Liabilities                                                                                                                                                                    |   | 6,512             |   | 10,709           |   |
|                                                                                                                                                                                 |   |              |   |             |   |
| Shareholders’ Equity:                                                                                                                                                           |   |              |   |             |   |
| Ordinary shares, NIS 0.01 par value –  Authorized – 40,000,000 shares; Issued and outstanding – 16,366,572 shares  at  September 30, 2001 and December  31, 2000 |   | 42                |   | 42               |   |
| Additional paid-in capital                                                                                                                                                           |   | 55,478            |   | 58,688           |   |
| Deferred compensation                                                                                                                                                                |   | (1,798            | )      | (5,723           | )      |
| Accumulated deficit                                                                                                                                                                  |   | (39,870           | )      | (24,003          | )      |
| Treasury shares, at cost – 134,000 shares  and 0 shares at  September 30, 2001  and December 31, 2000, respectively                                                        |   | (100              | )      | -                |   |
|                                                                                                                                                                                 |   |              |   |             |   |
| Total Shareholders’ Equity                                                                                                                                                      |   | 13,752            |   | 29,004           |   |
|                                                                                                                                                                                 |   |              |   |             |   |
| Total Liabilities and Shareholders’ Equity                                                                                                                                      |   | $                 | 20,264 |             | $      | 39,713 |   |

 

The accompanying notes are an integral part of thesecondensed consolidated financial statements.

 

**RADVIEW SOFTWARE LTD. AND SUBSIDIARIES**

## **CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS**

**(In thousands, except per share data)**

**(Unaudited)**

** **
|                                                                       |   | **Three  Months Ended  September 30,** |   | **Nine  Months Ended  September 30,** |   |
|----------------------------------------------------------------------------|--------|----------------------------------------|--------|---------------------------------------|--------|
|                                                                       |   | **2001**                               |   | **2000**                              |   | **2001** |   | **2000** |   |
| Revenues:                                                                  |   |                                   |   |                                  |   |   |   |   |   |
| Software  licenses                                                         |   | $                                      | 1,051  |                                  | $      | 2,636 |   | $ | 4,519 |   | $ | 6,892 |   |
| Service                                                                    |   | 687                                    |   | 466                                   |   | 2,126 |   | 1,176 |   |
| Total Revenues                                                             |   | 1,738                                  |   | 3,102                                 |   | 6,645 |   | 8,068 |   |
|                                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Cost of  Revenues:                                                         |   |                                   |   |                                  |   |   |   |   |   |
| Software  licenses                                                         |   | 114                                    |   | 143                                   |   | 263 |   | 431 |   |
| Service                                                                    |   | 282                                    |   | 138                                   |   | 964 |   | 298 |   |
| Total Cost of  Revenues                                                    |   | 396                                    |   | 281                                   |   | 1,227 |   | 729 |   |
|                                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Gross Profit                                                               |   | 1,342                                  |   | 2,821                                 |   | 5,418 |   | 7,339 |   |
|                                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Operating  Expenses:                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Sales and  marketing                                                       |   | 3,298                                  |   | 3,657                                 |   | 12,249 |   | 7,160 |   |
| Research and  development                                                  |   | 1,463                                  |   | 1,470                                 |   | 5,129 |   | 3,565 |   |
| General and  administrative                                                |   | 641                                    |   | 729                                   |   | 2,448 |   | 2,114 |   |
| Stock-based  compensation 1                                                |   | 114                                    |   | 533                                   |   | 715 |   | 1,106 |   |
| Nonrecurring  expenses (Note 4)                                            |   | 1,188                                  |   | -                                     |   | 1,425 |   | - |   |
| Total Operating  Expenses                                                  |   | 6,704                                  |   | 6,389                                 |   | 21,966 |   | 13,945 |   |
|                                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Operating loss                                                             |   | (5,362                                 | )      | (3,568                                | )      | (16,548 | ) | (6,606 | ) |
|                                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Interest income,  net                                                      |   | 147                                    |   | 240                                   |   | 621 |   | 165 |   |
| Other income,  net                                                         |   | 72                                     |   | 14                                    |   | 60 |   | - |   |
|                                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Net loss                                                                   |   | $                                      | (5,143 | )                                     | $      | (3,314 | ) | $ | (15,867 | ) | $ | (6,441 | ) |
|                                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Noncash stock  dividend distributed to  preferred  shareholders       |   | -                                      |   | 2,585                                 |   | - |   | 2,585 |   |
|                                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Net loss  attributable to  ordinary shareholders                      |   | $                                      | (5,143 | )                                     | $      | (5,899 | ) | $ | (15,867 | ) | $ | (9,026 | ) |
|                                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Net loss per  share attributable to ordinary shareholders (Note 3(a)):     |   |                                   |   |                                  |   |   |   |   |   |
| Net loss per  share – Basic and diluted                               |   | $                                      | (0.32  | )                                     | $      | (0.54 | ) | $ | (0.97 | ) | $ | (1.39 | ) |
| Weighted average  shares outstanding –  Basic and  diluted       |   | 16,292                                 |   | 10,994                                |   | 16,336 |   | 6,484 |   |
|                                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Pro forma net  loss per share attributable to ordinary shares (Note 3(b)): |   |                                   |   |                                  |   |   |   |   |   |
| Pro forma net  loss per share –  Basic and diluted               |   | $                                      | (0.32  | )                                     | $      | (0.41 | ) | $ | (0.97 | ) | $ | (0.71 | ) |
| Weighted average  shares outstanding –  Basic and  diluted       |   | 16,292                                 |   | 14,278                                |   | 16,336 |   | 12,699 |   |

----

| (1) The following  summarizes the departmental allocation of the stock-based compensation  charge: |   |   |   |   |   |   |   |   |   |
|----------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                               |   |   |   |   |   |   |   |   |   |
| Sales and  marketing                                                                               |   | $      | (12    | )      | $      | 310    |   | $      | 303    |   | $ | 556 |   |
| Research and  development                                                                          |   | 77     |   | 97     |   | 247    |   | 198    |   |
| General and  administrative                                                                        |   | 49     |   | 126    |   | 165    |   | 352    |   |
| Total  stock-based compensation                                                                    |   | $      | 114    |   | $      | 533    |   | $      | 715    |   | $ | 1,106 |   |

 

The accompanying notesare an integral part of these condensed consolidated financial statements.

 

**RADVIEW SOFTWARELTD. AND SUBSIDIARIES**

## **CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS**

**(In thousands)**

**(Unaudited)**

** **
|                                                                          |   | **Nine Months Ended  September 30,** |    |
|-------------------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                          |   | **2001**                             |    | **2000** |   |
| Cash Flows from Operating Activities:                                         |   |                                 |    |   |   |
| Net loss                                                                      |   | $                                    | (15,867 | ) | $ | (6,441 | ) |
| Adjustments to reconcile net loss to net  cash used in operating activities-- |   |                                 |    |   |   |
| Depreciation and amortization                                                 |   | 825                                  |    | 443 |   |
| Fixed asset impairment write-off (Note 4)                                     |   | 243                                  |    | - |   |
| Amortization of deferred compensation                                         |   | 715                                  |    | 1,106 |   |
| Interest on long-term loans                                                   |   | -                                    |    | 156 |   |
| Accrued severance pay                                                         |   | 109                                  |    | 199 |   |
| Changes in operating assets and liabilities--                                 |   |                                 |    |   |   |
| Accounts receivable                                                           |   | 1,125                                |    | (1,079 | ) |
| Prepaid expenses and other current assets                                     |   | 258                                  |    | (280 | ) |
| Accounts payable                                                              |   | (1,385                               | )       | 506 |   |
| Accrued expenses                                                              |   | 497                                  |    | 1,301 |   |
| Accrued restructuring charge (Note 4)                                         |   | 387                                  |    | - |   |
| Deferred revenue                                                              |   | 9                                    |    | 676 |   |
| Net cash used in operating activities                                         |   | (13,084                              | )       | (3,413 | ) |
|                                                                          |   |                                 |    |   |   |
| Cash Flows from Investing Activities:                                         |   |                                 |    |   |   |
| Sale of short-term investments                                                |   | -                                    |    | 513 |   |
| Purchases of property and equipment                                           |   | (597                                 | )       | (1,449 | ) |
| Increase in other assets                                                      |   | (129                                 | )       | (315 | ) |
| Net cash used in investing activities                                         |   | (726                                 | )       | (1,251 | ) |
|                                                                          |   |                                 |    |   |   |
| Cash Flows from Financing Activities:                                         |   |                                 |    |   |   |
| Repayment of long-term loans                                                  |   | (3,814                               | )       | (1,305 | ) |
| Proceeds from shares issued                                                   |   | -                                    |    | 406 |   |
| Payment of offering costs from initial  public offering                       |   | -                                    |    | 35,300 |   |
| Purchases of treasury shares                                                  |   | (100                                 | )       | - |   |
| Net cash provided by (used in) financing  activities                          |   | (3,914                               | )       | 34,401 |   |
|                                                                          |   |                                 |    |   |   |
| Increase (decrease) in cash and cash  equivalents                             |   | (17,724                              | )       | 29,737 |   |
|                                                                          |   |                                 |    |   |   |
| Cash and cash equivalents, beginning of  period                               |   | 33,469                               |    | 7,652 |   |
| Cash and cash equivalents, end of period                                      |   | $                                    | 15,745  |   | $ | 37,389 |   |
|                                                                          |   |                                 |    |   |   |
| Cash paid during period for interest                                          |   | $                                    | 60      |   | $ | 620 |   |
|                                                                          |   |                                 |    |   |   |
| Supplemental disclosure of noncash  financing and investing activities:       |   |                                 |    |   |   |
| Conversion of preferred shares to ordinary  shares                            |   | $                                    | -       |   | $ | 13 |   |
| Noncash dividend distributed to  shareholders                                 |   | $                                    | -       |   | $ | 2,585 |   |
| Reversal of deferred compensation due to  option cancellations                |   | $                                    | 3,225   |   | $ | 99 |   |

 

The accompanying notesare an integral part of these condensed consolidated financial statements.

 

**RADVIEW SOFTWARE LTD. ANDSUBSIDIARIES**

## **NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS**

**(Unaudited)**

 

 

**1.    ****Operations**

 

RadViewSoftware Ltd. (the Company) is an Israeli corporation.  The Company develops, markets and supportssoftware that enables organizations to verify the scalability, efficiency andreliability of Web applications, and facilitates their rapid development.

 

**2.    ****SignificantAccounting Policies**

 

TheCompany’s consolidated financial statements are prepared in accordance withaccounting principles generally accepted in the United States.  The significant policies followed in thepreparation of the consolidated financial statements, applied on a consistentbasis, are as follows:

 

*(a)  Financial Statements in U.S. Dollars*

 

Theconsolidated financial statements of the Company have been prepared in U.S.dollars because the currency of the primary economic environment in which theoperations of the Company are conducted is the U.S. dollar. Substantially all ofthe Company's sales are in U.S. dollars. Most purchases of materials,components and most marketing costs are denominated in U.S. dollars. Therefore,the functional currency of the Company is the U.S. dollar.

 

Transactionsand balances denominated in U.S. dollars are presented at their originalamounts. Transactions and balances in other currencies are translated into U.S.dollars in accordance with the principles set forth in Financial AccountingStandards Board of the United States (FASB) Statement of Accounting Standards(SFAS) No. 52, *Foreign Currency Translation*.Accordingly, items have been translated as follows:

 

•      MonetaryItems -- At the exchange rate in effect on the balance sheet date.

•      NonmonetaryItems -- At historical exchange rates.

•      Revenue andExpense Items -- At the exchange rates in effect as of the date of recognitionof those items (excluding depreciation and other items deriving fromnonmonetary items).

 

Allexchange gains and losses from the above-mentioned translation (which were immaterialfor all periods presented) are reflected in the statements of operations. Therepresentative rates of exchange as of September 30, 2001 and 2000 were U.S.$1.00 to 4.355 New Israeli Shekel (NIS) and 4.030 NIS, respectively.

* *

*(b)  InterimFinancial Statements*

* *

Theaccompanying condensed, consolidated balance sheet as of September 30, 2001 andthe condensed, consolidated statements of operations for the three and ninemonths ended September 30, 2001 and 2000 and the condensed, consolidatedstatements of cash flows for the nine months ended September 30, 2001 and 2000,are unaudited but, in the opinion of management, include all adjustments,consisting of normal recurring adjustments, necessary for a fair presentationof results for these interim periods. Certain information and footnotedisclosures normally included in financial statements prepared in accordancewith generally accepted accounting principles have been omitted, although theCompany believes that the disclosures included are adequate to make theinformation presented not misleading.  Theresults of operations for the three and nine months ended September 30, 2001are not necessarily indicative of the results to be expected for the entirefiscal year.  These financial statementsshould be read in conjunction with the consolidated financial statements andrelated notes included in the Company’s Form 10-K filed with the SEC on March29, 2001.

 

*(c)   Principlesof Consolidation*

* *

Theconsolidated financial statements include the accounts of the Company and itswholly owned subsidiaries.  All materialintercompany balances and transactions have been eliminated in consolidation.

 

*(d)  RevenueRecognition*

* *

TheCompany recognizes revenue in accordance with Statement of Position (SOP) 97-2,*Software Revenue Recognition*, andSOP 98-9, *Modification of SOP97-2, Software Revenue Recognition, With Respect to Certain Transactions*.  ****SOP 98-9****requires use of the residual method forrecognition of revenues when vendor-specific objective evidence exists for undeliveredelements but does not exist for delivered elements of a software arrangement.If fair value for a delivered element does not exist but fair value does existfor all undelivered elements, the Company defers the fair value of theundelivered elements and recognizes the remaining value for the deliveredelements.

 

Revenuesfrom software product licenses are recognized upon delivery of the softwareprovided there is persuasive evidence of an arrangement, the fee is fixed ordeterminable and collection of the related receivable is probable. Revenuesunder multiple element arrangements, which may include software, softwaremaintenance and training, are allocated to each element based on theirrespective fair values, based on vendor-specific objective evidence. Thisobjective evidence represents the price of products and services when soldseparately. Revenue is recognized for software licenses sold to resellers ordistributors at the time of shipment, provided that all revenue recognitioncriteria are fulfilled.

 

Revenuesfrom software maintenance agreements are recognized ratably over the term ofthe maintenance period, which is typically one year. Revenues from trainingarrangements are recognized as the services are performed.

 

Amountscollected or billed prior to satisfying the above revenue recognition criteriaare reflected as deferred revenue. Deferred revenue primarily representsdeferred maintenance revenue.

 

*(e)   CashEquivalents*

* *

Cashequivalents are highly liquid investments with original maturities of 90 daysor less.  The Company accounts forinvestments under SFAS No. 115*, Accounting for Certain Investments in Debt andEquity Securities*.  UnderSFAS No. 115, investments for which the Company has the positive intent andability to hold to maturity, consisting of cash equivalents, are reported atamortized cost, which approximates fair market value.

 

**3.     Earnings PerShare**

 

*(a) NetLoss Per Share*

 

Basicand diluted net loss per share is presented in conformity with SFAS No. 128, *Earnings Per Share*, for all periodspresented.  Basic and diluted net lossper ordinary share was determined by dividing net loss attributable to ordinaryshareholders by the weighted average ordinary shares outstanding during theperiod.  Diluted net loss per ordinaryshare is the same as basic net loss per ordinary share for all periodspresented, as the effects of the Company's potential additional ordinary shareswere antidilutive.

 

Thecalculation of diluted net loss per share excludes stock options to purchaseapproximately 3,610,000 ordinary shares as of September 30, 2001 and 3,510,000ordinary shares as of September 31, 2000 because their inclusion would beantidilutive.

 

*(b) ProForma Net Loss Per Share*

 

Proforma net loss per share has been computed as described above and also giveseffect to preferred shares that were converted upon the completion of theCompany’s initial public offering in August 2000, using the if-convertedmethod, from the original date of issuance.

 

Thefollowing table reflects the reconciliation of the shares used in thecomputation of pro forma net loss per share.

 
|                                                                                                            |   | **Three  months  ended September 30,** |   | **Nine  months ended  September 30,** |   |
|-----------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|---------------------------------------|--------|
|                                                                                                            |   | **2001**                               |   | **2000**                              |   | **2001** |   | **2000** |   |
|                                                                                                            |   | **(In  thousands)**                    |   |
| Pro  forma basic and diluted:                                                                                   |   |                                   |   |                                  |   |   |   |   |   |
| Weighted  average ordinary shares outstanding used in computing net loss per share                              |   | 16,292                                 |   | 10,994                                |   | 16,336 |   | 6,484 |   |
| Weighted  average ordinary shares issuable upon the conversion of preferred shares                              |   | -                                      |   | 2,576                                 |   | - |   | 4,362 |   |
| Weighted  average ordinary shares issuable upon the exercise of outstanding warrant                             |   | -                                      |   | 70                                    |   | - |   | 118 |   |
| Weighted  average ordinary shares issuable upon exercise of outstanding options held by  certain shareholders   |   | -                                      |   | 512                                   |   | - |   | 1,521 |   |
| Weighted  average ordinary shares to be issued to certain Series A preferred  shareholders                      |   | -                                      |   | 126                                   |   | - |   | 214 |   |
|                                                                                                            |   |                                   |   |                                  |   |   |   |   |   |
| Weighted  average ordinary shares outstanding used in computing pro forma basic and  diluted net loss per share |   | 16,292                                 |   | 14,278                                |   | 16,336 |   | 12,699 |   |

 

**4.    ****NonrecurringExpenses**

 

InJuly 2001, the Company implemented a restructuring plan in an effort to loweroperating costs.  The restructuringcharge recorded in the third quarter of 2001 totaled $1.2 million and consistedof the following:

•      $469,000of employee severance costs resulting from the termination of 35 employees, ofwhom 23 were sales and marketing employees, 5 were research and developmentemployees, and 7 were general and administrative employees;

•      $401,000of idle lease space and termination payments for offices worldwide that are nolonger required as a result of the reduction in personnel.  In determining the facilities-related costs,the Company has estimated the vacancy period and sub-lease income;

•      $243,000of fixed asset impairment costs; and

•      $75,000of vendor contract termination fees.

Restructuringcharges accrued but not paid as of September 30, 2001 totaled $387,000,consisting of severance costs of $42,000 and idle lease costs of $345,000.  Amounts expected to be paid within 12 monthshave been classified as a current liability in the accompanying consolidatedbalance sheet.

 

Nonrecurringexpenses for the nine months ended September 30, 2001 also include a $237,000payment to a landlord incurred upon the termination of a facility leaseagreement in March 2001.

 

InOctober 2001, the Company further reduced its workforce by an additional20%.  The Company expects to record anadditional restructuring expense of $300,000 in the fourth quarter of 2001consisting of employee severance costs of $150,000 and fixed asset impairmentcosts of $150,000.

 

**5.     Shareholders’Equity**

 

In April 2001, the Company’s board of directorsapproved a stock repurchase program under which the Company may repurchase up to $2.5 million of theCompany's ordinary shares.  Purchaseswill be made based on market conditions from time-to-time at the discretion ofmanagement in open market purchases or privately negotiated transactions.  Through September 30, 2001, the Companyrepurchased an aggregate of 134,000 ordinary shares at an aggregate cost of$100,000.

 

**6.    ****ComprehensiveIncome (Loss)**

 

SFAS No. 130, *Reporting Comprehensive Income*, requiresdisclosure of all components of comprehensive income (loss) on an annual andinterim basis.  Comprehensive income(loss) is defined as the change in equity of a business enterprise during aperiod from transactions and other events and circumstances from nonownersources.  The Company’s comprehensiveloss is equal to its net loss for all periods presented.

 

**7.     Disclosures AboutSegments of an Enterprise**

 

The Company has adopted SFAS No. 131, *Disclosures about Segments of an Enterprise andRelated Information.*  SFASNo. 131 establishes standards for reporting information regarding operatingsegments in annual financial statements and requires selected information forthose segments to be presented in interim financial reports issued to shareholders.SFAS No. 131 also establishes standards for related disclosures about productsand services and geographic areas. Operating segments are identified ascomponents of an enterprise about which separate discrete financial informationis available for evaluation by the chief operating decision maker, ordecision-making group, in making decisions how to allocate resources and assessperformance.

 

The Company's chief operating decision makers, asdefined under SFAS No. 131, are the Chief Executive Officer and the ChiefFinancial Officer. To date, the Company has viewed its operations and has managedits business as principally one operating segment.

 

The Company's revenues by geographic area are asfollows:

 
|            |   | **Three  months ended   September 30,** |   | **Nine  months ended   September 30,** |   |
|-----------------|--------|-----------------------------------------|--------|----------------------------------------|--------|
|            |   | **2001**                                |   | **2000**                               |   | **2001** |   | **2000** |   |
|            |   | **(In  thousands)**                     |   |
|            |   |                                    |   |                                   |   |   |   |   |   |
| United  States  |   | $                                       | 1,191  |                                   | $      | 2,540 |   | $ | 4,693 |   | $ | 6,850 |   |
| Europe          |   | 223                                     |   | 310                                    |   | 995 |   | 722 |   |
| Israel          |   | 90                                      |   | 172                                    |   | 401 |   | 348 |   |
| Other           |   | 234                                     |   | 80                                     |   | 556 |   | 148 |   |
| Total  revenues |   | $                                       | 1,738  |                                   | $      | 3,102 |   | $ | 6,645 |   | $ | 8,068 |   |

 

**8.     Recent AccountingPronouncements**

 

In July 2001, the Financial Accounting Standards Board(FASB) issued Statement on Financial Accounting Standards (SFAS) No. 141, *Business Combinations*.  SFAS No. 141 requires all businesscombinations initiated after June 30, 2001 to be accounted for using thepurchase method.  The adoption of SFASNo. 141 is not expected to have a material impact on the Company's consolidatedfinancial statements.

 

In July 2001, the FASB also issued SFAS No. 142, *Goodwill and Other Intangible Assets*.  Under SFAS No. 142, goodwill is no longersubject to amortization over its estimated useful life.  Rather, goodwill is subject to at least anannual assessment for impairment by applying a fair-value-based test.  Also under SFAS No. 142, intangible assetsacquired in conjunction with a business combination should be separatelyrecognized if the benefit of the intangible asset is obtained throughcontractual or other legal rights, or if the intangible asset can be sold,transferred, licensed, rented or exchanged, regardless of the acquirer's intentto do so.  Intangible assets willcontinue to be amortized over their respective useful lives under SFAS No.142.  The Company must adopt SFAS No.142 on January 1, 2002.  The adoption ofSFAS No. 142 is not expected to have a material impact on the Company'sconsolidated financial statements.

 

In August 2001, the FASB issued SFAS No. 143, Accountingfor Asset Retirement Obligations. This statement amends FASB Statement No. 19,Financial Accounting and Reporting by Oil and Gas Producing Companies. SFAS No.143 requires that the fair value of a liability for an asset retirementobligation be recognized in the period in which it is incurred if a reasonableestimate of fair value can be made. The associated asset retirement costs arecapitalized as part of the carrying amount of the long-lived asset. , Theprovisions of this statement are effective for financial statements issued forfiscal years beginning after June 15, 2002. The adoption SFAS No. 143 is notexpected to have a material impact on the Company’s consolidated financialstatements.

 

In August 2001, the FASB issued SFAS No. 144, *Accounting for Impairment or Disposal of Long-LivedAssets*.  This statementsupersedes SFAS No. 121, *Accounting for theImpairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of,*and the accounting and reporting provisions of APB Opinion No. 30, *Reporting the Results of Operations – Report theEffects of Disposal of a Segment of a Business, and Extraordinary, Unusual andInfrequently Occurring Events and Transactions*.  Under this statement it is required that oneaccounting model be used for long-lived assets to be disposed of by sale,whether previously held and used or newly acquired, and it broadens thepresentation of discontinued operations to include more disposaltransactions.  The provisions of thisstatement are effective for financial statements issued for fiscal yearsbeginning after December 15, 2001, and interim period within those fiscalyears, with early adoption permitted. The Company is currently evaluating whether it will early adopt theprovisions of SFAS No. 144, and management will not be able to determine theultimate impact of this statement on its results of operations or financialposition until such time as its provision are applied.

#  

# **MANAGEMENT'SDISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

*Statements in this Quarterly Report on Form 10-Q concerningRadView’s business outlook or future performance; anticipated revenues,expenses or other financial items; product introductions and plans andobjectives related thereto; and statements concerning assumptions made orexpectations as to any future events, conditions, performance or other matters,are “forward-looking statements” as that term is defined under U. S. federalsecurities laws. Forward-looking statements are subject to various risks,uncertainties and other factors that could cause actual results to differmaterially from those stated in such statements. These risks, uncertainties andfactors include, but are not limited to: our limited operating history andhistory of losses; market acceptance of our products; our ability to developnew products and enhance existing products; impact of significant competition;and other factors detailed in RadView’s filings with the Securities andExchange Commission, including this Quarterly Report on Form 10-Q.*

 

InJuly 2001, the Company implemented a restructuring plan in an effort to reduceoperating costs.  The restructuring planincluded the termination of approximately 20% of the Company’s work force andthe termination of certain sales facility leases.  In October 2001, the Company further reduced its workforceby an additional 20%.  As a result of these combined restructuringactions, the Company expects that quarterly operating expenses will be reducedby approximately 40% compared to the second quarter of 2001.

 

**Results of Operations**

 

The following table sets forth, as a percentage oftotal revenues, consolidated statement of operations data for the periodsindicated:
|                        |   | **Three Months Ended   September 30,** |   | **Nine Months Ended   September 30,** |   |
|-----------------------------|--------|----------------------------------------|--------|---------------------------------------|--------|
|                        |   | **2001**                               |   | **2000**                              |   | **2001** |   | **2000** |   |
| Revenues:                   |   |                                   |   |                                  |   |   |   |   |   |
| Software  licenses          |   | 60.5                                   | %      | 85.0                                  | %      | 68.0 | % | 85.4 | % |
| Service                     |   | 39.5                                   |   | 15.0                                  |   | 32.0 |   | 14.6 |   |
| Total  revenues             |   | 100.0                                  |   | 100.0                                 |   | 100.0 |   | 100.0 |   |
|                        |   |                                   |   |                                  |   |   |   |   |   |
| Cost of Sales:              |   |                                   |   |                                  |   |   |   |   |   |
| Software  licenses          |   | 6.6                                    |   | 4.6                                   |   | 4.0 |   | 5.3 |   |
| Service                     |   | 16.2                                   |   | 4.4                                   |   | 14.5 |   | 3.7 |   |
| Total cost of  sales        |   | 22.8                                   |   | 9.0                                   |   | 18.5 |   | 9.0 |   |
|                        |   |                                   |   |                                  |   |   |   |   |   |
| Gross Profit                |   | 77.3                                   |   | 91.0                                  |   | 81.5 |   | 91.0 |   |
|                        |   |                                   |   |                                  |   |   |   |   |   |
| Operating  Expenses:        |   |                                   |   |                                  |   |   |   |   |   |
| Sales and  marketing        |   | 189.7                                  |   | 117.9                                 |   | 184.3 |   | 88.7 |   |
| Research and  development   |   | 84.2                                   |   | 47.4                                  |   | 77.2 |   | 44.2 |   |
| General and  administrative |   | 36.9                                   |   | 23.5                                  |   | 36.8 |   | 26.2 |   |
| Stock-based  compensation   |   | 6.5                                    |   | 17.2                                  |   | 10.8 |   | 13.7 |   |
| Nonrecurring  expenses      |   | 68.4                                   |   | 0.0                                   |   | 21.4 |   | 0.0 |   |
| Total operating  expenses   |   | 385.7                                  |   | 206.0                                 |   | 330.5 |   | 172.8 |   |
|                        |   |                                   |   |                                  |   |   |   |   |   |
| Operating loss              |   | (308.5                                 | )      | (115.0                                | )      | (249.0 | ) | (81.8 | ) |
|                        |   |                                   |   |                                  |   |   |   |   |   |
| Interest income,  net       |   | 8.5                                    |   | 7.7                                   |   | 9.3 |   | 2.0 |   |
| Other income,  net          |   | 4.1                                    |   | 0.5                                   |   | 0.9 |   | 0.0 |   |
|                        |   |                                   |   |                                  |   |   |   |   |   |
| Net loss                    |   | (295.9                                 | )%     | (106.8                                | )%     | (238.8 | )% | (79.8 | )% |

 

**Three Months and Nine Months Ended September 30, 2001 and2000**

 

***Revenues***

 

*Total Revenues*. Total revenues were approximately $1.7 million for the three monthsended September 30, 2001 and $3.1 million for the same period in 2000.  Total revenues were approximately $6.6million for the nine months ended September 30, 2001 and $8.1 million for thesame period in 2000.

 

*Software Licenses*. Software license revenues were $1.1 million for the three months endedSeptember 30, 2001 compared to $2.6 million for the same period in 2000,representing a decrease of 60.1%. Software license revenues were $4.5 million for the nine months endedSeptember 30, 2001 compared to $6.9 million for the same period in 2000,representing a decrease of 34.4%. Software license revenues decreased due to lower unit volume sales in2001 compared to the same period in 2000.

 

*Services*.  Service revenues were $687,000for the three months ended September 30, 2001 compared to $466,000 for the sameperiod in 2000, representing an increase of 47.4%.  Service revenues were $2.1 million for the nine months endedSeptember 30, 2001 compared to $1.2 million for the same period in 2000,representing an increase of 80.8%.  Theseincreases were due to higher maintenance and training revenues resulting froman increase in the Company’s installed customer base.

 

***Cost of Revenues***

 

*Software Licenses*. Cost of software licenses consists principally of direct product costs,such as product media and packaging, as well as royalties due to thirdparties.  Cost of software licensesdecreased from $143,000, or 5.4% of software license revenue, for the threemonths ended September 30, 2000 to $114,000, or 10.8% of software licenserevenue, for the same period in 2001. Cost of software licenses decreased from $431,000, or 6.3% of softwarelicense revenue, for the nine months ended September 30, 2000 to $263,000, or5.8% of software license revenue, for the same period in 2001.  These decreases were due to lower royaltycosts for third-party software in 2001.

 

*Services*.  Cost of services consistsprincipally of personnel-related costs associated with customer support andtraining.  Cost of services increasedfrom $138,000, or 29.6% of service revenue, for the three months endedSeptember 30, 2000 to $282,000, or 41.0% of service revenue, for the sameperiod in 2001.  Cost of servicesincreased from $298,000, or 25.3% of service revenue, for the nine months endedSeptember 30, 2000 to $964,000, or 45.3% of service revenue, for the sameperiod in 2001.  These increases weredue to an increase in the number of employees providing support and maintenanceservices.

 

***Operating Expenses***

 

*Sales and Marketing*. Sales and marketing expenses consistprincipally of salaries and commissions earned by sales personnel, recruitingcosts, trade show costs, travel and other marketing costs such as advertisingand product promotion.  Sales andmarketing expenses decreased from $3.7 million, or 117.9% of total revenues,for the three months ended September 30, 2000 to $3.3 million, or 189.7% oftotal revenues, for the same period in 2001. This decrease resulted from lower compensation and facilities costsarising from the restructuring actions taken in July 2001.  Sales and marketing expenses increased from$7.2 million, or 88.7% of total revenues, for the nine months ended September30, 2000 to $12.2 million, or 184.3% of total revenues, for the same period in2001.  This increase was due toincreased spending on marketing programs, such as advertising, trade shows andlead-generation activities and the expansion of the Company’s sales andmarketing workforce from 37 employees in September 2000 to 65 employees justprior to the restructuring on July 20, 2001. As a result of the restructuring actions in July and October 2001, theCompany expects that sales and marketing expenses will be lower in the fourthquarter of 2001 than in the quarter ended September 30, 2001.

 

*Research and Development*. Research and development expenses consistprincipally of salaries and related expenses required to develop and enhancethe Company’s products.  Research anddevelopment expenses were $1.5 million, or 47.4% of total revenues, for thethree months ended September 30, 2000, and $1.5 million, or 84.2% of totalrevenues, for the same period in 2001. Research and development expenses remained constant due to lowercompensation costs arising from the restructuring actions taken in July2001.  Research and development expensesincreased from $3.6 million, or 44.2% of total revenues, for the nine monthsended September 30, 2000, to $5.1 million, or 77.2% of total revenues, for thesame period in 2001.  This increase wasdue to an increase in the number of research and development personnel from 32employees in September 2000 to 54 employees just prior to the restructuring onJuly 20, 2001.  As a result of therestructuring actions in July and October 2001, the Company expects thatresearch and development expenses will be lower in the fourth quarter of 2001than in the quarter ended September 30, 2001.

 

*General and Administrative*. General and administrative expenses consistprincipally of executive, finance and administrative salaries and relatedexpenses and costs.  General andadministrative expenses decreased from $729,000, or 23.5% of total revenues,for the three months ended September 30, 2000 to $641,000, or 36.9% of totalrevenues, for the same period in 2001. General and administrative expenses decreased due to lower compensationcosts arising from the restructuring actions taken in July 2001.  General and administrative expensesincreased from $2.1 million, or 26.2% of total revenues, for the nine monthsended September 30, 2000 to $2.4 million, or 36.8% of total revenues, for thesame period in 2001.  This increase wasdue to increased costs associated with being a publicly-held company and anincrease in the administrative costs to accommodate the Company’s growing U.S.operations.  As a result of therestructuring actions in July and October 2001, the Company expects thatgeneral and administrative expenses will be lower in the fourth quarter of 2001than in the quarter ended September 30, 2001.

 

*Stock-based Compensation*. Stock-based compensation expense decreasedfrom $533,000 for the three months ended September 30, 2000, to $114,000 forthe same period in 2001.  Stock-basedcompensation expense decreased from $1.1 million for the nine months endedSeptember 30, 2000, to $715,000 for the same period in 2001.  These decreases resulted from thecancellation of employee stock options for terminated employees for whomstock-based compensation was being recorded.

 

*Nonrecurring Expenses*. In July 2001, the Companyimplemented a restructuring plan in an effort to lower operating costs.  The restructuring plan included thetermination of 35 employees, or approximately 20% of the Company’s work force,and the termination of certain sales facility leases.  Of the employees terminated 23 worked in sales and marketing, 5worked in research and development and 7 worked in general andadministrative.  The Company recorded arestructuring charge of  $1.2 million inthe third quarter of 2001 consisting of employee severance costs of $469,000,idle lease space costs of $401,000, fixed asset impairment costs of $243,000and vendor contract termination fees of $75,000.  Restructuring charges accrued but not paid as of September 30,2001 totaled $387,000, consisting of severance costs of $42,000 and idle leasecosts of $345,000.

 

Nonrecurringexpenses for the nine months ended September 30, 2001 also include a $237,000payment to a landlord incurred upon the termination of a facility leaseagreement in March 2001.

 

InOctober 2001, the Company reduced its workforce by an additional 20%.  The Company expects to record  additional restructuring expenses ofapproximately $300,000 in the fourth quarter of 2001 consisting of employeeseverance costs and fixed asset impairment costs.

 

*Interest Income, Net*. Interest income, net consists principallyof interest earned on cash investments offset in part by interestexpense incurred in connection with long-term debt.  Interest income, net was $240,000 for the three months endedSeptember 30, 2000 compared to $147,000 for the same period in 2001.  Interest income, net decreased due to alower invested cash balance during the three months ended September 30, 2001compared to the three months ended September 30, 2000.  Interest income, net was $165,000 for thenine months ended September 30, 2000 compared to $621,000 for the same periodin 2001.  Interest income, net increaseddue to an increase in interest income in 2001 from investment of the netproceeds of the Company’s initial public offering in August 2000 and thedecrease in interest expense resulted from the repayment of all outstandinglong-term debt during the first quarter of 2001.

 

*Other Income, Net*. Other income, net consists principally ofcurrency translation gains and losses. Other income, net was $14,000 for the three months ended September 30,2000 compared to $72,000 for the same period in 2001.  Other income, net was $0 for the nine months ended September 30,2000 compared to $60,000 for the same period in 2001.  These changes were due to exchange rate fluctuations.

 

*Income Taxes.* The Company has estimated net operating loss carryforwards for Israelitax purposes totaling approximately $14 million through September 30, 2001 thatwould reduce future Israeli income taxes, if any. These net operating lossesmay be carried forward indefinitely and offset against future taxableincome.  The Company expects that duringthe period in which these tax losses are utilized its income would besubstantially tax exempt.  Therefore,the income tax rate of the Company during the tax-exempt period will be zero.There will be no tax benefit available from these losses and no deferred incometaxes have been included in the Company’s financial statements.

 

TheCompany’s U.S. subsidiary has net operating loss carryforwards for U.S. Federaland state tax purposes totaling approximately $12 million through September 30,2001.  These losses are available tooffset any future U.S. taxable income of the U.S. subsidiary and will expirebetween 2012 and 2021.  The Company hasrecorded a full valuation allowance against its deferred tax assets due to theuncertainty surrounding the ability and the timing of the realization of thesetax benefits.

 

**Liquidity and Capital Resources**

 

Asof September 30, 2001, cash and cash equivalents totaled $15.7 million comparedto $33.5 million as of December 31, 2000.

 

Cashused in operating activities was $13.1 million for the nine months endedSeptember 30, 2001 and $3.4 million for the same period in 2000.  Cash used for the first nine months of 2001was due to the net loss of $15.9 million and a $1.4 million decrease inaccounts payable, offset in part by $825,000 of depreciation and amortization,$243,000 of fixed asset impairment write-off, $824,000 of other noncashcharges, a $1.1 million decrease in accounts receivable, a $258,000 decrease inprepaid expenses, a $497,000 increase in accrued expenses, a $387,000 increasein accrued restructuring charge, and a $9,000 increase in deferredrevenue.   Cash used for the first ninemonths of 2000 was due to a net loss of $6.4 million, a $1.1 million increasein accounts receivable and a $280,000 increase in prepaid expenses, offset inpart by $443,000 of depreciation and amortization, $1.3 million of othernoncash charges, $156,000 of interest accrued on long-term loans, a $506,000increase in accounts payable, a $1.3 million increase in accrued expenses and a$676,000 increase in deferred revenue.

 

Cashused in investing activities was $726,000 for the nine months ended September30, 2001 and $1.3 million for the same period in 2000.  Cash used in investing activities for thefirst nine months of 2001 was due to the purchase of $597,000 of property andequipment and an increase in deposits of $129,000.  Cash used in investing activities for the first nine months of2000 was due to the purchase of $1.4 million of property and equipment and anincrease in deposits of $315,000, offset by proceeds from the maturities ofshort-term investments of $513,000.

 

Cash used in financingactivities was $3.9 million for the nine months ended September 30, 2001 andcash provided by financing activities was $34.4 million for the same period in2000.  Cash used in financing activitiesfor the first nine months of 2001 consisted primarily of $3.8 million for therepayment of all outstanding long-term debt and $100,000 used to repurchase theCompany’s ordinary shares.  Cashprovided by financing activities for the first nine months of 2000 consisted of$35.3 million of net proceeds from the initial public offering in August 2000and $406,000 of net proceeds from the sale of preferred shares, offset by $1.3million for the repayment of principal on related party loans.

 

In April 2001, the Company’s board of directorsapproved a stock repurchase program under which the Company may repurchase up to $2.5 million of theCompany's ordinary shares.  Purchaseswill be made based on market conditions from time-to-time at the discretion ofmanagement in open market purchases or privately negotiated transactions.  Through September 30, 2001, the Companyrepurchased 134,000 of its ordinary shares at an aggregate cost of $100,000.

 

InJuly 2001, the Company received a commitment letter from a bank with respect toa one-year revolving line of credit facility. In October 2001, the Company decided not to proceed with definitivedocumentation for this facility and this commitment has terminated.

 

TheCompany expects that operating expenses, as well as planned capitalexpenditures, will constitute a material use of the Company’s cashresources.  The Company believes thatits existing cash and cash equivalents will be sufficient to meet itsanticipated needs for working capital and capital expenditures for at least thenext 12 months.  The Company may find itnecessary to obtain additional equity or debt financing.  In the event additional financing isrequired, the Company may not be able to complete financing on acceptable termsor at all.

 

# **ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK**

 

The Company does not use derivative financial instruments in itsinvesting portfolio.  The Company placesits investments in instruments that meet high credit quality standards such asmoney market funds, government securities, and commercial paper.  The Company limits the amount of creditexposure to any one issuer.  The Companydoes not expect any material loss with respect to its investment portfolio.

 

The Company conducts business in various foreigncurrencies, primarily in Europe and the Middle East.  As a result, the Company is exposed to the effect of foreigncurrency exchange rate fluctuations on the U.S. dollar value of foreigncurrency-denominated revenues and expenses. The Company does not use foreign exchange forward contracts to hedge itsforeign currency denominated receivables. Looking forward, there can be no assurance that changes in foreigncurrency rates, relative to the U.S. dollar, will not materially adverselyaffect the consolidated results of the Company.

 

# **PARTII - OTHER INFORMATION**

 

## **Item2.  Changes in Securities**

 

**(d) Use of Proceeds from Sale of Registered Securities**

 

On August 9, 2000, in connection with the Company’sinitial public offering, the Securities and Exchange Commission declaredeffective a Registration Statement on Form F-1 (No.333-41526) that registered5,750,000 ordinary shares.  The managingunderwriters in the offering were Donaldson Lufkin Jenrette, Wit SoundView,Piper Jaffrey, and DLJdirect.

 

On August 15, 2000, the Company sold 4,000,000 of suchordinary shares at an initial public offering price of $10.00 per share,generating gross offering proceeds of $40 million.  After deducting $2.8 million in underwriting discounts and approximately$1.9 million in other related expenses, the net proceeds to the Company wereapproximately $35.3 million.

 

Through September 30, 2001, the Company has used $19.6million of the net proceeds from the initial public offering as follows:

•      $1.6 millionfor capital expenditures;

•      $1.4 millionfor repayment of principal and accrued interest on a loan with Rad DataCommunications, Inc., a related party;

•      $3.8 millionfor repayment of principal and accrued interest on long-term debt with a bank;

•      $100,000 forthe repurchase of ordinary shares; and

•      $12.7 millionfor working capital.

 

## **Item5.  Other Information**

 

The Company’s application to transfer to the NasdaqSmallCap Market from the Nasdaq National Market was approved effective as ofSeptember 25, 2001.  The Company’sordinary shares continue to trade under the symbol RDVW.

 

# **SIGNATURES**

 

 

Pursuant to the requirements of the Securities andExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

 

 

RADVIEW SOFTWARE LTD.

(Registrant)

 

 

Brian E. LeClair

Vice President and ChiefFinancial Officer

 

Dated:  November 13, 2001